## Answered: - MGT411 (Money & Banking) Semester 2016 Marks: 10 Define Risk and

MGT411 (Money & Banking)

Semester 2016

Marks: 10

• Define Risk and Variance?
• A person purchases an asset for \$2000. There is the possibility that the value of this asset may fall to \$1700 or rise to \$2400. The probability of rise and fall is the same. This information can be presented in a tabular form as:
 Investment : \$2000 Possibilities Probability Pay Off Fall 1/2 \$1700 Rise 1/2 \$2400

How much risk is involved in this investment? Explain your answer by calculating Variance. Calculation must consist of all the steps.

Discuss the following topics:

• Coupon Bonds
• Zero Coupon Bonds

Instructions:

1. This assignment covers 9 to 14 lectures.
2. Use 12-point font size in Times New Roman.
3. Show all the necessary calculations.
4. Upload your assignment with in due date and time. No assignment will be accepted after the due date and time.
5. No credit will be given to copied assignments.

Step 1:

Compute the expected value

Investment : \$2000

Possibilities

Probability Pay Off Payoff ? Probability

Fall

1-Feb

\$1,700

(1/2) ? \$1700= \$850

Rise

1-Feb

\$2,400

(1/2) ? \$2400=...

Solution details:
STATUS
QUALITY
Approved

This question was answered on: Oct 07, 2020

Solution~0002227969.zip (25.37 KB)

This attachment is locked

We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy (Deadline assured. Flexible pricing. TurnItIn Report provided)

STATUS

QUALITY

Approved

Oct 07, 2020

EXPERT

Tutor